bagsc's Journal: Debt and Religion

"The journey of a thousand miles begins with a single step"

It's funny that you can spend years of you life studying something and always find a new angle on it. Especially when that new angle is several thousand years old. I've spent a lot of time thinking today about debt, a fundamental building block of finance, and religion.

Debt really isn't that complicated. Someone gives you something, and you oblige yourself on your honor (or some other social contract) to give them something back. If I give a relative some money when they're on hard times, and they're obliged to return it, is that moral? Why didn't I just give it to them with no obligation - that would be charity, and that would be moral. Is it less moral to let them suffer without that money? What if trying to repay that debt causes them even more suffering?

This isn't exactly groundbreaking philosophizing. Consider Matthew 6:9-15. I'm certain the phrase "Forgive us our debts, as we forgive our debtors" will ring a bell. But why, of all the sins of flesh and soul should the Lord's Prayer choose only indebtedness to be spoken of? Isn't that a little weird?

I'm no Bible student, but it seems to be that its a perfect simplification of all social convenants. If I dishonor/shame/insult/hurt the society, I'd prefer that my mistake/misjudgement/stupidity be forgotten. The entire concept of a contract, a covenant probably originated in debt, as it's such a basic economic principle.

Validating this, consider the Arabic word for 'religion' - 'deen.' In Arabic, words are very important and enlightening in their relationships. 'Deen' is from the root word 'dayn' - meaning debt. Note the important fact from this relationship: Religion in Arabic is a outgrowth of the more fundamental concept of debt. Some Arabic philosophers describe the relationship as man's debt to God and doing good deeds to eventually repay the debt which will be accounted for when he dies. Yet I think in a more simplistic view, we can view worldviews as a framework for how your actions impact society positively or negatively, and how you should be rewarded or punished for it, and come to religion from there.

Judaism, Christianity, and Islam forbid usuary, but some groups don't necessarily forbid interest. Islam allows no debts whatsoever in most interpretations, but usury today in most Christian-valued countries merely means excessive interest. In a related note, most credit card and "personal loan" companies in the US charges exactly the legal limit for many sub-prime borrowers. And many "pay-day loans" contracts are still working their way through the system to see if they are illegal.

Islamic Banking is incredibly complicated, as it requires just as many theologians as it does bankers. Riba, the Arabic word for usury, is forbidden while a great many other types of contracts are not. During the Christian days, insurance, investments sharing risk, and forward sales were legal. Yet any financial theorist could tell you that is identical to interest, a fact that forms the basis of many proofs in financial theory. Islam forbids even most insurance, as it considers it to be gambling.

Some blame the inability to accept debt risk in Islamic society for their economic backwardness. 'Inshahallah' is the Arabic phrase meaning 'if Allah wills it (then it will be)' - and the fact that this fatalistic phrase is one of the most common in Arabic is somewhat disenheartening for a developmental economist. Can Saudi Arabia, land of the Prophet, sell oil for dollars and buy American bonds with them? Is that ethical? How do you 'follow the money' if no one will use a bank?

Loan sharking is a Federal crime in America, and we have the right to enter bankruptcy if we can't fulfill our obligations (sometimes). But is it ethical to forgive debts to other counties? There's actually a law preventing the Federal government from lending below its cost of capital without an Act of Congress. If we lend money to a corrupt government in Africa, and they can't pay it back, do we set an example with strength by letting them suffer? Do we set an example for charity and being a pushover? How do our actions impact the worldviews of the world?

Anti-semitism tends to focus on the old religious contradiction, Jews cannot charge interest to Jews, Christians can't charge interest to anyone, but Jews can charge interest to Christians. The ever popular conspiracy theory on the Arab street 'Protocols of Zion' (before casting stones, remember Ann Coulter is a best seller in the US...) blames Jews for everything through banking. How many millions people have died because of differences of opinion on how debts may be repaid?

It's humbling to take something so simple, that you use everyday in work and in life, and consider the massive implications of it. When does debt benefit society? I don't have an answer.